We asked our writers to share their top stock picks for the month of November, and this is what they had to say:
G A Chester: Fresnillo
Silver and gold miner Fresnillo (LSE: FRES) recently reiterated production guidance for the current year, having suffered no adverse impact on its operations from the September earthquake in Mexico.
A £10bn FTSE 100 giant, with a balance sheet boasting net cash of $88m, I rate the stock a buy, not only because it could thrive in volatile times, but also because it has a strong pipeline of optimisation and development projects that should contribute to significant growth in the coming years.
The shares are currently trading over 30% below the peak they reached in the wake of the Brexit vote.
G A Chester has no position in Fresnillo.
Edward Sheldon: JD Sports
Shares in JD Sports (LSE: JD) enjoyed a powerful run between the start of 2015 and May this year, rising from 100p to 460p. However, since May, the shares have pulled back considerably, and at a price of around 350p I believe they now offer value.
Due to the increasing popularity of ‘athleisure wear,’ the company has seen its sales explode in recent years, with revenue surging from £1,216m in FY14 to £2,379m last year. City analysts expect a top-line figure of £3,007m this year, growth of an impressive 26%.
The stock currently trades on a forward looking P/E ratio of 15.3, a valuation that looks attractive in my view, given the growth on offer.
Edward Sheldon has no position in JD Sports Fashion
Kevin Godbold: Dunelm Group
Homewares retailer Dunelm Group’s (LSE: DNLM) shares still trade below the £10 they achieved during 2016 after falling to accommodate lower profits for the year to July 2017. But City analysts predict a bounce-back in earnings around 12% during 2018 with the firm making almost as much as during 2016.
In October, we learnt that total like-for-like revenue grew by 9.3% during the firm’s first quarter, and the recent acquisition of online operation Worldstores is integrating well. Recovery, value and growth are on the menu, but I think the share price is yet to fully catch up, which could change during November.
Kevin owns shares in Dunelm Group.
Rupert Hargreaves: XP Power
XP Power’s (LSE: XPP) growth over the past three years has been nothing short of outstanding. This year, the company is projected to generate sales of £165m, up around 65% from 2014’s figure of £101m.
A recent trading update confirmed that the group is on track to hit this target with revenues for the nine months to September rising 34% to £124m. Order intake was up 44% year-on-year. To fuel further growth, management is on the hunt for acquisitions.
XPP recently acquired Comdel Inc, a designer and manufacturer of radio frequency power supplies for £17m. For the full year, analysts are projecting earnings per share growth of 26%, and the shares trade at a forward P/E of 23.7.
Rupert Hargreaves owns no stock mentioned.
Ian Pierce: Greencore
This month I’m taking a closer look at food-to-go producer Greencore (LSE: GNC), whose share price has fallen more than 15% over the past three months. I believe fears over the acquisition of a competitor by its largest US customer are overblown given their contracts and co-investments in a production facility.
Furthermore, the underlying business continues to perform very well with organic revenue growth of 11.8% in Q3 thanks to a strong performance on both sides of the Atlantic. With its shares priced at less than 13 times earnings, good growth and a healthy 2.8% dividend yield, I reckon Greencore is looking very attractive right now.
Ian Pierce has no position in any of the shares mentioned.
Paul Summers: Focusrite
Small-cap aficionados with a penchant for growth may wish to take advantage of recent price weakness in music products supplier Focusrite (LSE: TUNE) before the company reports full-year results on 21st November.
Boasting many of the hallmarks of a quality business (including great returns on capital employed and high operating margins), last month’s trading update from the debt-free firm made reference to revenue and profits growing relative to those in H1 thanks to foreign exchange benefits, improved sales and “effective management of gross margin”.
At a time when many companies look overvalued, Focusrite’s price to earnings (P/E) ratio of 17 still looks fairly reasonable.
Bilaal Mohamed: Pennon Group
My top stock for November is Pennon Group (LSE: PNN), the Exeter-based environmental infrastructure company that owns South West Water and leading waste treatment and disposal business Viridor.
The FTSE 250-listed group operates as a virtual monopoly within its own geographical area, which covers Devon, Cornwall, and parts of Dorset and Somerset, and is also a leader in delivering energy from waste though its Viridor subsidiary.
Pennon has a long-established policy to grow its dividend by 4% above inflation each year at least until 2020, and currently offers risk-averse income seekers with a handsome payout that yields almost 5%.
Bilaal has no position in Pennon Group.
Alan Oscroft: Lancashire Holdings
If you can overlook short-term ups and downs, I think insurance is a very good long-term business to be in. I’ve typically invested in the larger general insurers and life insurers, but I’m increasingy drawn to Lancashire Holdings (LSE: LRE). Recent earnings from the property, energy, marine and aviation specialist have been erratic, but should pick up next year.
But what I really like is the company’s dividend strategy, paying low ordinary dividends topped up by specials as and when appropriate, and there’s an 8% total yield forecast for this year and 6.8% next. I reckon that’s the way all insurance dividends should be delivered, and I see a good long-term future from these shares on a modest valuation.
Alan Oscroft has no position in Lancashire Holdings.
Jack Tang: Persimmon
Persimmon (LSE: PSN) is my top stock pick for two reasons.
First, the housebuilder has an attractive earnings outlook. Not only does the company continue to benefit from a buoyant housing sector, but it is increasing its build activity thanks to its long landbank and strong balance sheet. As such, City analysts expect Persimmon’s earnings to grow faster than many of its large-cap rivals, at 18% this year and 6% for 2018.
Second, valuations are undemanding. In contrast to the exuberance that has gripped some stocks, Persimmon is valued at just under 12 times its expected earnings this year, and has a prospective dividend yield of 4.8%.
Jack Tang does not own shares in Persimmon.
Royston Wild: Bovis Homes
I believe share pickers should consider snapping up Bovis Homes (LSE: BVS) in the run-up to its next financial update on 14th November.
Newsflow from across the housebuilding sector remains extremely positive and another bubbly statement from Bovis could provide the support for a spurt past recent record highs. Indeed, the Kent-based builder reported “[a] good pick-up in sales during the traditionally quieter summer months of July and August” just last month.
Earnings are expected to fall 18% in 2017, reflecting Bovis’ decision to reduce build rates in 2017, but robust market conditions are predicted to prompt a 22% earnings rebound next year. I reckon a forward P/E ratio of 16 times is a decent level upon which to buy into this quality stock.
Royston Wild does not own shares in Bovis Homes.
Roland Head: Howden Joinery Group
Shares of kitchen manufacturer Howden Joinery Group (LSE: HWDN) have fallen by 20% from their June 2015 peak. But despite this, the group’s trading has remained robust. Profits are expected to rise by about 11% in 2018.
I think the shares may have fallen too far. This group’s finances are extremely strong. Operating margin has hovered between 17% and 18% since 2014, while return on capital employed (ROCE) is stunning at over 40%. Net cash was £215m in June.
With the shares trading on 15 times forecast earnings and offering a useful 2.7% yield, I think Howden could be a profitable buy in November.
Roland Head does not own shares of Howden Joinery Group.
